China Belt and Road Initiative Journal: Research Analysis and Perspectives

ISSN 2515-9402

EISSN 2515-9410

Vocalizing Local Concerns: FDI in the Western Balkans and Chinese Investment


Ivica Bakota

Volume 2, Issue 1, January 2019

Special Issue “16+1” Cooperation and Chinese Investments in Central and Eastern European Countries


Among European regions, Western Balkans has consistently ranked at the bottom in terms of the
amount of FDI it attracts. Moreover, the structure of its FDI inflow has been consistently tied with
political and security factors diminishing the importance of government policies and endogenous agency in promoting FDI growth. During European debt crisis, direct investment into Western Balkans registered sharp decline and since then asymmetrically slow growth of Western European generated FDI, triggering the governments to set up policies aiming at diversification of FDI stock and external financing. The internationalization of FDI brought the changes in the structure of inward FDI and gave the new impetus in pursuing new growth models. Parallel with the changes in Western Balkans investment patterns, Chinese investment in the region has been steadily increasing over the last four years and influenced Western Balkans to become more receptive for state-proxy investments, but at the same time raised the objections regarding the nature of Chinese state-proxy investment and its impact on sustainable FDI growth models in the Western Balkans.
In order to show the effects of the changing patterns of FDI in the Western Balkans, this chapter is
divided into three sections. The first section lays out how exogenous factors over-determined inward
FDI in the Western Balkans. The second section examines typical problems non-Western FDI creates in “Euro-dependent” structure of FDI. Following this, the third section focuses on the Chinese state-proxy investment its influence on Western Balkans FDI patterns, showing how it raises concerns regarding the selective involvement of Chinese state-proxy actors with sub-state actors in the Western Balkans, feasibility of Chinese development model in the Western Balkans and questions “real” intentions Chinese investors in the region.

Content :

1. Introduction

2. “The Balkan Effect” and (Geo)political Determinants to Inward FDI in the
Western Balkans (WB)

3. General Problems with Non-Western Investment in the Western Balkans (WB)

4. Some Problems of the Chinese Investment in the Western Balkans

(1) Politically selective investment

(2) Responsible shareholder or just another free-rider?

(3) Involvement with regime actors

(4) Long-term regional development minded actor?